US CFTC releases comprehensive report on DeFi, calls for policymakers and industry dialogue

Call for DeFi regulatory policy cooperation
On the 8th, the U.S. Commodity Futures Trading Commission (CFTC) Digital Asset and Blockchain Technology Subcommittee released a comprehensive report on DeFi (decentralized finance). The purpose is to provide information to authorities considering policies related to digital assets, including the U.S. Congress, state legislatures, and the CFTC.
CFTC Commissioner Christie Goldsmith Romero, the report’s lead author, said DeFi is at the center of illicit financial risks, cyber hacking and theft, and emphasized the need for “policy development and industry dialogue.” He recommends improving DeFi knowledge, increasing the speed and efficiency of implementation, evaluating existing federal and state DeFi regulations, and identifying where regulations need to be expanded to address risks.
Justin Slaughter, policy director at U.S. cryptocurrency investment firm Paradigm and member of the CFTC’s technical advisory committee, said the report is the U.S. government’s most comprehensive review of DeFi. He said the report’s recommendations do not have legal force, but are an important step in DeFi policy decisions.
Ari Redboard, vice-chair of the CFTC’s Technical Advisory Committee, also pointed out that regulatory discussions on cryptocurrency (virtual currency) to date have focused on centralized exchanges. While the U.S. Congress is working to regulate stablecoins, he emphasized that key parts of the debate around DeFi have yet to move forward.
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What is DeFi?
Decentralized Finance (DeFi) refers to financial services or systems that utilize blockchain to perform without a central administrator.
Cryptocurrency Glossary

DeFi is a stage for fraud and attacks
In 2023, 751 security incidents resulted in digital asset losses totaling over $1.8 billion. Although the number and number of DeFi hacks has decreased by about half compared to 2022, it still remains a serious problem, with six incidents resulting in losses of more than $100 million. The biggest DeFi hack of 2023 occurred on the Mixin Network, where approximately $200 million was stolen.
Many attacks, including Mixin, are carried out by exploiting third-party vulnerabilities, such as improper storage of private keys used to manage project wallets.
This highlights the importance of comprehensive security audits in DeFi programs, which should not only focus on finding vulnerabilities in smart contracts, but also consider the business logic and security practices of the entire project.
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